Hydrogen Ramp-Up Falls Short of Expectations – German Government Presents 10-Point Plan

Berlin – The Federal Ministry for Economic Affairs and Energy (BMWE) presented a 10-point plan on October 19, 2026, aimed at advancing Germany’s stalled hydrogen market development. The plan provides for more favourable production conditions, demand-oriented infrastructure expansion and additional demand incentives.

While the first sections of the hydrogen core network are already in operation, the economic basis for broad hydrogen use remains difficult. High production costs and the limited willingness of potential buyers to pay are hampering the market ramp-up. Alongside the expansion of production and infrastructure, the question of how reliable demand for hydrogen can emerge is increasingly the focus.

Hydrogen Production: EU Requirements and Grid Fees as Cost Factors

The BMWE wants to relax the European production requirements for green hydrogen in order to reduce costs. The existing requirements are intended to ensure that the electricity used for electrolysis comes from renewable energy sources and supports their expansion. The German government is seeking more flexible rules to allow more economical operation of electrolysers. The government’s 10-point plan does not specify which changes are being sought or what impact they could have on the greenhouse gas balance.

At the same time, the BMWE intends to continue to include other forms of low-carbon hydrogen alongside green hydrogen in funding programmes and demand instruments. This is meant to open up additional sources of supply.

Special arrangements are also planned for electricity grid fees. The Federal Network Agency (Bundesnetzagentur) wants to retain the existing exemption for eligible existing plants. Electrolysers not yet in operation are also to benefit, provided that the final investment decision was taken before the AgNes determination was announced and the plants start operations by August 4, 2029 at the latest. A capacity-based special grid fee is planned for electrolysers that are not exempt and produce renewable or other low-carbon hydrogen. The determination is expected at the end of 2026.

On the SEN-1 offshore site in the North Sea, the BMWE also intends to enable two electrolysis projects of 250 MW each.

Hydrogen Core Network: Developing Infrastructure and Imports in Line with Demand

According to the BMWE, more than 500 km of hydrogen pipelines were commissioned in 2025. A further 2,200 km are being implemented. According to the ministry, the federal government and the states will provide EUR 4.2 billion in public funds for the core network build-out in the coming years, in addition to the federal guarantee for the amortisation account.

The German government is also examining storage needs and possible financing instruments for regional hydrogen networks. With the implementation of the European gas and hydrogen internal market package, the planning of regional distribution networks is to be aligned more closely with actual demand.

Alongside domestic production, the BMWE is relying on pipeline imports, primarily from Europe, and on shipments from other partner countries. H2Global and European hydrogen auctions are intended to support international supply chains.

Industry and Power Plants: Targeted Incentives for New Demand

The German government plans tenders for the conversion of a total of 4 GW of gas-fired power plant capacity to hydrogen: 2 GW in 2027 for hydrogen operation from 2040, and a further 2 GW between 2030 and 2032 for operation from 2043. The key elements of the support scheme are still being developed.

While the conversion of power plants is only expected to create additional demand in the long term, the BMWE is aiming for earlier stimulus in industry. In offshore wind expansion, the carbon footprint criterion is to favour the use of low-emission steel. A green gas quota, the design of which is still to be determined, could strengthen sales of climate-friendly gases.

A hydrogen funding window under carbon contracts for difference is also to receive at least EUR 1.5 billion. IWR has previously reported on this.

Federal Network Agency Examines Possible Delays to Hydrogen Core Network

The hydrogen core network, approved in 2024, comprises 9,040 km of pipelines with expected investments of EUR 18.9 billion. In the current draft of the Gas and Hydrogen Network Development Plan, grid operators envisage a hydrogen network 9,241 km in length by 2037, with investments of EUR 24.3 billion.

The National Hydrogen Council continues to see the hydrogen ramp-up as well behind original expectations. For the late 2040s, it cites annual demand of 275 to 555 TWh of hydrogen and hydrogen derivatives, depending on the scenario. The council regards these figures as long-term reference values rather than a forecast.

The Federal Network Agency is currently consulting on possible delays to the commissioning of individual hydrogen pipelines. If industrial customers switch to hydrogen later, grid utilisation may also rise more slowly. The examination of possible delays makes clear that timelines for the hydrogen core network build-out cannot be considered independently of actual market developments.

Source: IWR Online, 22 Oct 2026